Microsoft has slashed the Chinese price of its Office suite for home users by more than 70 per cent in a promotional campaign aimed at persuading consumers in the piracy-plagued market that licensed programs can be affordable.
The promotion brings the cost of Office Home and Student 2007 in China from Rmb699 to only Rmb199 ($29) – a level less than one-seventh of the retail price Microsoft was recommending for the suite of word-processing, spreadsheet and presentation software just three months ago.
Microsoft’s Windows operating system and Office suite are ubiquitous in China, but the majority of users have long relied on pirated copies. The piracy rate for personal computer software in China was more than 80 per cent in 2007, according to the Business Software Alliance.
Microsoft saw “very good pick-up” in sales for the Office Home suite after halving its price in June and was now seeking to test how consumers responded to additional reductions, said Garth Fort, general manager for business operations and marketing in Greater China.
“There was feedback from our retail partners that they think there is actually a lot more demand at lower prices, so this is an effort to test the hypothesis,” Mr Fort said. “In China ... there is actually a pretty significant market for high quality counterfeit goods that sells itself as genuine,” he said. “We need to figure out how to tap into that with the real product.”
The difficulty of persuading Chinese consumers to pay for products easily available in pirated form has meant Microsoft has in the past put limited focus on retail strategy.
However, the cut-price Office package underlines Microsoft’s determination gradually to transform users of its products into paying customers. Mr Fort said the number of copies of the Office home edition prepared for the promotion was equivalent to roughly half a year’s inventory at its previous prices, but just one day of sales had shown that some retailers would run out faster than they had expected.
“We may have to go back and make more,” he said. The promotion comes as Office faces growing competition from rival packages of word-processing and other “productivity” programs that offer similar core functionality at much lower prices or for free. However, Microsoft has been cheered by Beijing’s efforts to promote the use of licensed software.
“Microsoft is actually happy with the progress China has made on the general environment for intellectual property rights, [although] we also understand that there is still a long way to go,” said Mr Fort. The proportion of PCs sold with pre-installed copies of Windows had risen “tremendously” over the past five years, and in unit terms China was now the second largest market for the operating system, he said.
